The accounting principle that requires accounting information to be based on actual cost and requires assets and services to be recorded initially at the cash or cash-equivalent amount given in exchange, is the:
A) Accounting equation.
B) Cost principle.
C) Going-concern assumption.
D) Realization principle.
E) Business entity assumption.

Question

Quizplus · Accepted Answer

The cost principle is also known as the historical cost principle and it requires assets and services to be recorded at their original cost at the time they were acquired or exchanged. This principle ensures that financial statements provide a reliable picture of the company's financial position based on objective and verifiable data.

The Accounting Principle That Requires Accounting Information to Be Based